Adding staff? Decide before you hire whether you want an employee or an independent contractor. Under the Fair Labor Standards Act (FLSA) and some states’ laws, you must pay overtime to nonexempt employees. Not so for independent contractors.

Make the employee-or-contractor call well before you bring someone on board. Don’t assume you can make the designation later.

Recent case: Rexhep Bulaj did repair and maintenance work for Wilmette Real Estate and Management in exchange for a weekly salary and a rent-free apartment. He received a regular paycheck with tax deductions, got a W-2 at the end of the year and had to be on duty during specific hours and at specific properties. Over time, his duties expanded to include showing vacant apartments to prospective tenants.

When he was fired, he sued, alleging he had regularly worked more than 60 hours per week, but had only been paid a set salary that was not based on how long he worked.

The company argued that Bulaj had really been an independent contractor. It said that how he did his work was entirely up to him and that he provided his own tools.

The court said that wasn’t enough to make him an independent contractor, given all the other evidence that the company had treated Bulaj as an employee for more than a decade. (Bulaj v. Wilmette Real Estate and Management, No. 09-CV-6263, ND IL, 2010)

Final note: Drafting independent contractor agreements isn’t a DIY job. Get your attorney to do it.

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